EXHIBIT 10.2
CROSS TIMBERS OIL COMPANY
AGREEMENT FOR GRANT OF PERFORMANCE SHARES
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This Agreement for Grant of Performance Shares (this "Agreement") is
executed and effective on the 20th day of February, 2001, by and between CROSS
TIMBERS OIL COMPANY, a Delaware corporation (the "Company"), and [form for Louis
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X. Xxxxxxx, Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxxxxx, XX] (the "Executive").
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WITNESSETH:
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WHEREAS, the Board of Directors of the Company and the Compensation
Committee (as hereinafter defined) recognize that the current business
environment makes it difficult to attract and retain highly qualified key
employees unless a certain degree of security can be offered to such individuals
against organizational and personnel changes which frequently follow a Change in
Control (as defined below) of a corporation; and
WHEREAS, even rumors of acquisitions or mergers may cause key employees to
consider major career changes in an effort to ensure financial security for
themselves and their families; and
WHEREAS, the Company desires to ensure fair treatment of its key employees
in the event of a Change in Control and to allow them to make critical career
decisions without undue time pressure and financial uncertainty; and
WHEREAS, the Company recognizes that its key employees will be involved in
evaluating or negotiating any offers, proposals or other transactions which
could result in a Change in Control of the Company and believes that it is in
the best interest of the Company and its stockholders for such key employees to
be in a position, free from personal, financial and employment considerations,
to assess objectively and pursue aggressively the interests of the Company and
its stockholders in making these evaluations and carrying on such negotiations;
and
WHEREAS, the Board of Directors of the Company and the Compensation
Committee believe it is essential to provide such key employees with assurance
that, in the event of a Change in Control, they will receive grants of
performance shares consistent with the grants they have historically received
under the terms of the Cross Timbers Oil Company 1998 Stock Incentive Plan, and
in order to accomplish these objectives, the Board and the Compensation
Committee have caused the Company to enter into this Agreement.
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NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and obligations contained herein, the Company and the Executive agree as
follows:
ARTICLE I
DEFINITIONS
As used herein, the following words and phrases shall have the following
respective meanings unless the context clearly indicates otherwise.
1.1 Board. The Board of Directors of the Company.
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1.2 Change in Control. A "Change in Control" shall mean any one of the
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following:
(a) "Continuing Directors" no longer constitute a majority of the
Board; the term "Continuing Director" means any individual who is a member
of the Board on the date hereof or was nominated for election as a director
by, or whose nomination as a director was approved by, the Board with the
affirmative vote of a majority of the Continuing Directors;
(b) any person or group of persons (as defined in Rule 13d-5 under the
Securities Exchange Act of 1934, as amended ("Exchange Act")) together with
his or its affiliates, becomes the beneficial owner, directly or
indirectly, of 25% or more of the voting power of the Company's then
outstanding securities entitled generally to vote for the election of the
Company's directors;
(c) the merger or consolidation to which the Company is a party if the
shareholders of the Company immediately prior to the effective date of such
merger or consolidation have beneficial ownership (as defined in Rule 13d-3
under the Exchange Act) of less than 50% of the combined voting power to
vote for the election of directors of the surviving corporation or other
entity following the effective date of such merger or consolidation; or
(d) the sale of all or substantially all of the assets of the Company
or the liquidation or dissolution of the Company.
Notwithstanding anything herein to the contrary, under no circumstances will a
change in the constitution of the board of directors of any Subsidiary, a change
in the beneficial ownership of any Subsidiary, the merger or consolidation of a
Subsidiary with any other entity, the sale of all or substantially all of the
assets of any Subsidiary or the liquidation or dissolution of any Subsidiary
constitute a "Change in Control" under this Plan.
For purposes of this Agreement, if the Executive's employment with the
Company is terminated by the Company other than for "Cause" (as defined in the
Cross Timbers Oil
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Company Management Group Employee Severance Protection Plan) prior to the date
on which a Change in Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (ii) otherwise arose in
connection with a Change in Control, then for all purposes hereof, such
termination shall be deemed to have occurred immediately following a Change in
Control.
1.3 Common Stock. The common stock, par value $0.01 per share, which the
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Company is currently authorized to issue or may in the future be authorized to
issue, or any securities into which or for which the common stock of the Company
may be converted or exchanged, as the case may be.
1.4 Compensation Committee. The Compensation Committee of the Board of
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Directors of the Company.
1.5 Performance Shares. Shares of Common Stock of the Company which are
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issued pursuant to Performance Share Awards granted under the Plan, in
accordance with Article IV of the Plan.
1.6 Plan. The Cross Timbers Oil Company 1998 Stock Incentive Plan, or any
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successor or substitute plan under which Performance Shares may be granted.
ARTICLE II
GRANT OF PERFORMANCE SHARES
2.1 Performance Share Grant. If the Executive is employed by the Company
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on the date of a Change in Control, then immediately prior to such Change in
Control, the Company (or, as applicable, the Compensation Committee or other
committee with authority to grant awards under the Plan) shall grant a
Performance Share Award under the Plan to the Executive as follows: that number
of shares of Common Stock of the Company equal to (i) [see Exhibit A attached
for the number of shares for each individual] multiplied by (ii) the ratio,
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rounded down to the nearest whole number, of (A) the closing price of the
Company's Common Stock on the day on which the Change in Control occurs (or, if
such Common Stock is not traded on the day the Change in Control occurs, on the
day on which such Common Stock last traded prior to the Change of Control) minus
$30.00, divided by (B) $2.50. Provided, however, that the number of Performance
Shares calculated in accordance with the preceding sentence shall be reduced
(but not below zero) by any Performance Shares granted to the Executive under
the Plan after the date of this Agreement but prior to the date of the Change in
Control which have not been forfeited by the Executive prior to or on the date
of the Change in Control.
The grant of the Performance Share Award shall be made in accordance with
all of the terms and conditions of the Plan, including delivery of certificates
representing the Performance Shares and a written Award Agreement executed by
the Company and the Executive. The Performance Share Award granted under this
Agreement shall be 100% vested as of the date of the Change in Control, and the
Executive shall be entitled to receive certificates free of any
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legend regarding performance targets or forfeiture.
2.2 Adjustments. In the event that any dividend or other distribution
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(whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, stock split, reverse stock split, rights offering,
reorganization, merger, consolidation, split-up, spin-off, split-off,
combination, subdivision, repurchase, or exchange of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
Common Stock or other securities of the Company, or other similar corporate
transaction or event affects the Common Stock such that an adjustment is
determined by the Compensation Committee to be appropriate to prevent the
dilution or enlargement of the benefits or potential benefits intended to be
made available under this Agreement, then the Compensation Committee shall (i)
adjust the [number of] Performance Shares set forth in Section 2.1 above, [see
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Exhibit A attached for the number of shares for each individual] (ii) adjust the
$30.00 and $2.50 amounts set forth in Section 2.1 above, and (iii) adjust the
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number of Performance Shares granted under Section 2.3 below; for example, if
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the Common Stock is split on a 3 for 2 basis, 7,000 would be increased to
10,500, $30.00 would be reduced to $20.00, and $2.50 would be reduced to $1.67,
and the grant of 75,000 shares in Section 2.3 would be increased to 112,500.
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2.3 Special Performance Share Grant. Whether or not the Executive is
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entitled to a Performance Share Award under Section 2.1 above, if the Executive
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is employed by the Company on the date of a Change in Control, then immediately
prior to such Change in Control has occurred, the Company (or, as applicable,
the Compensation Committee or other committee with authority to grant awards
under the Plan) shall grant a Performance Share Award under the Plan to the
Executive equal to [see Exhibit A attached for the number of shares for each
individual] shares of Common Stock of the Company.
The grant of the Performance Share Award shall be made in accordance with
all of the terms and conditions of the Plan, including delivery of certificates
representing the Performance Shares and a written Award Agreement executed by
the Company and the Executive. The Performance Share Award granted under this
Agreement shall be 100% vested as of the date of the Change in Control, and the
Executive shall be entitled to receive certificates free of any legend regarding
performance targets or forfeiture.
2.4 Cash Payment in lieu of Performance Shares. To the extent the Company
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is unable to provide the Executive with the Performance Shares required by this
Agreement, the Company shall, in lieu thereof, pay to the Executive, in one
lump-sum cash payment within five (5) days after the date of the Change in
Control, an amount equal to the value of such Performance Shares as of the date
of the Change in Control.
2.5 No Set-off of Amounts Payable Hereunder. The Company's obligations
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hereunder also shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive.
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ARTICLE III
SUCCESSORS TO COMPANY
This Agreement shall bind any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, in the same manner and to the same extent
that the Company would be obligated under this Agreement if no succession had
taken place. In the case of any transaction in which a successor would not, by
the foregoing provision or by operation of law, be bound by this Agreement, the
Company shall require such successor expressly and unconditionally to assume and
agree to perform the Company's obligations under this Agreement, in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
hereof and shall entitle the Executive to compensation from the Company in the
same amount and on the same terms as the Executive would be entitled hereunder.
As used herein, "the Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Article III or which otherwise
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becomes bound by all the terms and provisions hereof by operation of law.
ARTICLE IV
DURATION AND AMENDMENT
4.1 Duration. This Agreement shall continue in effect until terminated in
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accordance with Section 4.2. If a Change in Control occurs, this Agreement shall
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continue in full force and effect, and shall not terminate or expire, until
after the Executive shall have received all of benefits to which he is entitled
hereunder in full.
4.2 Amendment or Termination. This Agreement may not be amended or
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terminated except by a mutual written agreement signed by all parties.
ARTICLE V
MISCELLANEOUS
5.1 Notices. All notices, requests, demands and other communications
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required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given on the date of service if served
personally on the party to whom notice is to be given and acknowledged by
written receipt, or on the seventh day after mailing if mailed (return receipt
requested), postage prepaid and properly addressed as follows:
Cross Timbers: Cross Timbers Oil Company
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000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Board of Directors
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Executive: [
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]
Any party may change its address for purposes of this Section 5.1 by giving the
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other party written notice of the new address in the manner set forth above.
5.2 Assignment; Binding Effect. Neither this Agreement nor any of the
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rights or obligations hereunder may be assigned by any party without the prior
written consent of the other party. This Agreement is binding upon and inures to
the benefit of Executive and Company and their respective heirs, personal
representatives and permitted successors and assigns.
5.3 Governing Law. This Agreement shall be governed by, and construed and
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enforced in accordance with, the laws of the State of Texas.
5.4 Waiver. Any waiver by any party of a breach of any provision of this
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Agreement shall not operate or be construed as a waiver of any subsequent breach
thereof or of any other provision of this Agreement.
5.5 Entire Agreement. This Agreement constitutes the entire agreement
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between the parties hereto with respect to the subject matter hereof and
supersedes any and all prior and contemporaneous promises, agreements and
representations not set forth in this Agreement.
5.6 Severability. Should any one or more of the provisions hereof be
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determined to be illegal or unenforceable, all other provisions hereof shall be
given effect separately therefrom and shall not be affected thereby.
5.7 Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same agreement.
5.8 Dispute Resolution. Any dispute, controversy or claim arising out of
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or in relation to or connection to this Agreement, including without limitation
any dispute as to the construction, validity, interpretation, enforceability or
breach of this Agreement, shall be exclusively and finally settled by
arbitration, and any party may submit such dispute, controversy or claim to
arbitration.
(a) Arbitrator. The arbitration shall be heard and determined by one
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arbitrator, who shall be impartial and who shall be selected by mutual
agreement of the parties. If the parties cannot agree on the arbitrator,
then the appointing authority for the implementation of such procedure
shall be the Chief Executive Officer of the American Arbitration
Association, who shall appoint an independent arbitrator who does not have
any financial interest in the dispute, controversy or claim.
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(b) Proceedings. Unless otherwise expressly agreed in writing by the
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parties to the arbitration proceedings:
(i) The arbitration proceedings shall be held in Fort Worth,
Texas, at a site chosen by mutual agreement of the parties, or if the
parties cannot reach agreement on a location within thirty (30) days
of the appointment of the arbitrator, then at a site chosen by the
arbitrator;
(ii) The arbitrator shall be and remain at all times wholly
independent and impartial;
(iii) The arbitration proceedings shall be conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association, as amended from time to time;
(iv) Any procedural issues not determined under the arbitral
rules selected pursuant to item (iii) above shall be determined by the
law of the place of arbitration, other than those laws which would
refer the matter to another jurisdiction;
(v) The costs of the arbitration proceedings (including
attorneys' fees and costs) shall be borne in the manner determined by
the arbitrator;
(vi) The decision of the arbitrator shall be reduced to
writing; final and binding without the right of appeal; the sole and
exclusive remedy regarding any claims, counterclaims, issues or
accounting presented to the arbitrator; made and promptly paid in
United States dollars free of any deduction or offset; and any costs
or fees incident to enforcing the award shall, to the maximum extent
permitted by law, be charged against the party resisting such
enforcement;
(vii) The award shall include interest from the date of any
breach or violation of this Agreement, as determined by the arbitral
award, and from the date of the award until paid in full, at 12% per
annum; and
(viii) Judgment upon the award may be entered in any court having
jurisdiction over the person or the assets of the party owing the
judgment or application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may
be.
(c) Acknowledgment Of Parties. Each party acknowledges that he or she
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or it has voluntarily and knowingly entered into an agreement to
arbitration under this Section by executing this Agreement.
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5.9 Employment Status. This Agreement does not constitute a contract of
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employment or impose on the Company any obligation to retain the Executive as an
employee.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year above written.
CROSS TIMBERS OIL COMPANY
By:_________________________________
Name: Xxxxxx X. Xxxxx
Title: Vice President - Human Resources
EXECUTIVE
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EXHIBIT A
Section 2.1
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Xxxxx X. Xxxxxxx 5,000 shares
Xxxxx X. Xxxxxx 7,000 shares
Xxxxxx X. Xxxxxxxxxx, XX 5,000 shares
Section 2.3
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Xxxxx X. Xxxxxxx 20,000 shares
Xxxxx X. Xxxxxx 75,000 shares
Xxxxxx X. Xxxxxxxxxx, XX 60,000 shares
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